Halifax says house prices up 7.5pc in 2013
01-09-2014
The lender's latest figures bring last year's average price increase to 7.5pc, despite a slip in December
For sale signs
Continuing house price rises are fuelling fears of a bubble. Photo: GETTY
By Nicole Blackmore
House prices were 7.5pc higher in the last three months of 2013 than in the same period in 2012, Halifax said, as it released its final data relating to last year. Its figures tallied with those from rival lender Nationwide, published earlier this month, which reported an increase of 8.4pc for 2013.
But Halifax reported a surprising drop of 0.6pc for December - marking the first monthly price decline in the year. This was not to be viewed as a change in trend, the lender indicated, maintaining its forecast for 2014 of increases between 4pc and 8pc.
By contrast Nationwide's December figures showed prices surged 1.4pc.
Housing analyst Howard Archer of IHS Economics, the forecaster, said: "While surprising, the 0.6pc drop reported by the Halifax does not fundamentally change the story of a markedly improving housing market."
The confirmation of strong price growth will rekindle debate about whether this poses a risk. Vince Cable, the Business Secretary, has described increases in house prices in the South as a “worrying” development that threatens Britain’s economic gains.
Martin Ellis, housing economist at Halifax, downplayed fears of run-away increases. He said rising prices could have the effect of encouraging more homeowners to put their properties up for sale, easing the shortage. He pointed to other Halifax research showing the proportion of people thinking that it will be a good time to sell in the next year exceeded those who think it will be a bad time - a first such result since the survey began in April 2011.
He said: "The recent strengthening in house prices is increasing the amount of equity that many home owners have in their home. This will potentially encourage and enable more owners to put their property on the market for sale over the coming year, therefore boosting supply."
Commentators have also warned that many homeowners who buy at the current low rates will struggle to meet their repayments when interest rates rise.
But Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Rising property prices are fuelling fears among some buyers that if they don’t act now, they will be priced out further, while falling unemployment has also raised concerns that interest rates will rise sooner rather than later.
“But it is still highly unlikely that interest rates will rise in 2014, despite unemployment falling faster than predicted and the economy recovering at a quicker rate. We are still very much in recovery mode and it’s unlikely that the Bank of England will risk raising interest rates too soon.”